What Is a Third-Party Check?

If someone writes a check to you, you could write that check over to someone else instead of cashing it or depositing it into your bank. At that point, it becomes a third-party check. Third-party checks can allow you to transfer money without using a mobile payment app or withdrawing cash at the ATM. If you’re looking for answers to a broad range of financial matters or just are ready to make a financial plan for yourself, consider talking to a financial advisor.

A third-party check is a two-party check that is endorsed to a third person. Normally, there are two parties to a check: A payer, who writes the check and a payee, who receives the check. The payee can take the check to their bank and cash it or deposit it into their account. Meanwhile, funds equal to the amount of the check are drafted from the account of the payer.

Third-party checks add another person into the loop. That third person has the right to cash or deposits the check once it’s signed over to them.

For example, say someone writes you a check for $300. It just so happens you owe that same amount to a friend for a short-term loan they made to you. You could sign the check over to them so that they can collect the $300.

By agreeing to give the check to them, you’ve turned it into a third-party check.

How Does a Third-Party Check Work?

A third-party check works by allowing the payee who initially receives the check to transfer the funds over to someone else, without having to first cash or deposit the check. Once the check is signed over to the third party, they’re responsible for depositing or cashing the check in order to get the money.

Different types of two-party checks can be transformed into third-party checks, including:

Personal checks
Cashier’s checks
Certified or official checks
Payroll checks

Third-party checks can allow you to bypass other money transfer methods. Instead of using a money transfer service through your bank account or a mobile payment app, you can just hand the check over. That can save you time and effort since you don’t have to deposit the check to your account first or arrange to transfer the money.

Can You Sign Over a Check to a Third Party?

Whether you can sign a check that you receive over to another person can depend on the issuing bank the check is written from and the third party’s bank. Financial institutions are not required to process third-party checks and not all of them do.

If someone writes a check to you that you’d like to sign over to someone else, it’s a good idea to contact the payer’s bank first to see if you can do so. The person you’re planning to transfer the check to can also check with their bank to see if cashing or depositing third-party checks is allowed.

Getting the green light from both banks beforehand can help you and the person you’re signing the check over to avoid any snags in the transfer process. Should one or both banks not agree, you’ll likely need to deposit the check yourself, then arrange to transfer the money to a third person afterward.

How to Sign a Check Over to Someone Else

If you receive a check that you’d like to endorse to a third party, the process is fairly simple. Here’s what you’ll need to do to create a third-party check:

Sign the back of the check with your name in the “Endorse Check Here” area.
Below your signature, write “Pay to the order of” and the name of the person to whom you’re signing the check over.
Give the check to the third party.

Once you give the check to the third party that you’ve endorsed it to, they’re responsible for making sure that the check gets cashed.

If they lose the check or it ends up getting stolen, the original check writer would have to agree to write a new check to replace it. You could ask them to write the check to you, then sign it over again or have them write it out to the third party.

How to Cash a Third-Party Check

Cashing a third-party check isn’t that different from cashing a two-party check. Here’s what you’ll need to do to cash or deposit a third-party check if you’re on the receiving end of one:

Verify that the check has been signed by the original payee and that they’ve written “Pay to the order of” along with your name on the back.
Sign the check below their signature and the “Pay to the order of” memo.
Present the check at the place that you plan to cash or deposit it along with a government-issued photo ID.

Be prepared to pay any fees your bank might charge to cash or deposit a third-party check.

Where Can You Cash a Third-Party Check?

Your bank or credit union might be your first choice if you’re able to cash or deposit third-party checks where you keep your checking or savings account. Again, however, not all banks allow you to do so. If you’re unable to cash or deposit a third-party check at your current bank, you could try these options next:

Deposit the check to your account through your bank’s ATM.
Consider opening a new account at a different bank that allows you to deposit third-party checks.
Take the check to a check-cashing service.

Opening a new bank account just to deposit a third-party check might seem a little extreme but it could be cheaper than paying the high fees a check-cashing service might charge. Online banks can offer checking accounts with no monthly maintenance fees and you may be able to deposit third-party checks from your mobile device.

Can You Cash a Third-Party Check Without a Bank Account?

If you’re one of the handfuls of Americans who are unbanked or underbanked, you may be wondering if you can cash a third-party check without a bank account. The answer is yes, you can, though you might pay a fee to do so.

You could take the check to the bank that it was issued from to see if you can cash it there. If the bank is unwilling to cash third-party checks or doesn’t cash checks for people who don’t have an account there, you could try a check-cashing service instead.

Money transfer apps could be another option. For example, Cash App doesn’t require you to have a bank account to use its services. It’s possible to add checks to your Cash App balance via mobile check deposit. Likewise, Venmo doesn’t require a bank account if you have a prepaid debit card that you can link instead. You can also use a mobile check deposit with Venmo.

The Bottom Line

In the age of digital payments, third-party checks might be a rarity for you. However, it’s still helpful to know how to sign a check over someone else or how to cash a third-party check should one come your way. You may want to work with a professional if you have a large number of similar matters that you’re dealing with on a frequent basis.

Checking Account Tips

Consider talking to your financial advisor about the best ways to send and receive money, with minimal hassle. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When depositing third-party checks into your account, it’s important to allow your bank time to verify it. If you withdraw cash, make debit card purchases or pay bills against the check amount and it later bounces, you could get hit with one or more overdraft fees. Reviewing your bank’s deposit and funds availability policies can give you a better idea of when the check will actually be available to you.